(8/1/15)- Medicare will be testing a new pilot program that is designed to affect
the health-care of about 150,000 Medicare patients over the next four years
that will allow patients with terminal illnesses to receive hospice care, but
still see doctors and get medical treatments, like chemotherapy or
hospitalization, intended to fight their illness.

This test program is based on research that shows that these patients end up
with better quality-of-life styles than would otherwise be the case.

(6/8/15)- A recent report by the U.S .Government Accountability Office, a
non-partisan arm of Congress concluded that the government relies too heavily
on the advice from the American Medical Association (AMA) in deciding how much
to pay doctors under Medicare.

Medicare uses a fee schedule and sets rates on its estimate of the “relative
value” for each service. Last year Medicare paid out about $70 billion for
Medicare services for the program’s beneficiaries.

The fee schedule takes into account the amount of time and technical skill
to perform a particular service, compared with other services. The report said
that Medicare officials usually accepted the recommendation they received from
a panel of 31 doctors formed by the AMA and other medical societies.

The meetings of the panel, which is known as the Relative Value Scale Update
Committee, are open for the public to attend, but people who attend must sign a
confidentiality agreement promising not to disclose the discussion.

Medicare has assigned a numerical value to each of more than 7,000 services
and procedures. The officials multiply this number by a “conversion factor” to
determine the ultimate payment to a doctor for his services.

There are no consumers, primary care doctors or health care economists on
the panel.

(4/27/15)- President Barack Obama has signed a bill that will end the practice
of having a beneficiary’s Social Security number on his/her Medicare card. In
this age of identity fraud, criminals could rather easily obtain a potential
victim’s Social Security number that they then would use for illegal purposes.
There are presently over 50 million Medicare cards out there with Social
Security numbers clearly printed on the card.

The new law was adopted with broad partisan approval as part of the “doc
fix” law. That law stated that Social Security numbers could not be “displayed,
coded or imbedded on the Medicare card”.

Over 4,500 people sign up for Medicare on average, per day. In the coming
decade, 18 million more people are expected to qualify, bringing the total
Medicare enrollment to74 million by 2025.

As an indication as to how complicated it will be to change away from that
number on the cards, Medicare depends on more than 200 computer systems, and
pays more than a billion claims a year from 1.5 million health care providers.

Medicare Carriers Performance Standards

(1/28/01)- Ever have trouble getting through on the telephone to your
Medicare carrier? Did you know that the Centers for Medicare and Medicaid
Services, formerly known as the Health Care Finance Administration (HCFA), a
branch of the Department of Health and Human Services has set performance
standards and criteria for Medicare fiscal intermediaries and carriers? The CMS
routinely evaluates Medicare contractor performance to ensure contractual
obligations are met. These evaluations focus on several areas: claims processing,
customer service and payment safeguard.

Medicare carriers need to achieve a monthly all-trunk busy rate of no more
than 10% when responding to telephone inquiries from customers. The all-trunk
busy rate is the rate at which telephone line can stay busy when a beneficiary
is trying to access a carrier. CMS also reminded carriers to answer telephone
inquiries and respond to written inquiries expeditiously and accurately. At
least a 97.5% or more of callers who speak with a customer service representative
should have their calls answered within 2 minutes and no less than 85% should
have their calls answered within the first minute. For more details on this
regulation see Federal Register October 31, 2000.

Help also appears to be on the way to those individuals who have had trouble
with the processing of health claims. The Department of Labor has issued rules
that require most private health plans to expedite processing of health claims
and appeals decisions on denied claims. The rules, published in the Federal
Register, November 21, 2000, pertain to the Employment Retirement Income
Security Act (ERISA). The rules replace the current 90-day deadline to issue a
coverage decision. Under the new rules, health plans will have up to 72 hours
to decide on claims for urgently needed care, 15 days for procedures that need
advanced approval and 30 days for care already delivered. If the coverage is
denied, individuals will have up to 180 days to appeal the decision. Currently,
one had up to 60 days to file an appeal. Appeals are to be handled by an
"appropriately trained" healthcare professional.

This is the first change made in the rules governing claims and appeals in
30 years. The change was based on a memorandum issued by the then President,
Bill Clinton ordering the Department of Labor to institute permanent rules in
ERISA health coverage. There is still need for Congress to pass a comprehensive
patients bill of rights that would apply to all insurance plans.

Outpatient Prospective Payment System (OPPS) under Medicare

The Outpatient Prospective Payment (OPPS) system went into effect on August
1st 2000. This replaces the cost-related methods that Medicare
previously used to reimburse hospitals. Just like the in-patient DRG’s,
outpatient encounters are going to have their own predetermined rates or fees
based on Ambulatory Patient Classifications (APCs).

In the past, Medicare paid different amounts for comparable outpatient
services. These amounts exceeded the amount paid for similar services done in
physician offices and other types of ambulatory settings. This old system
enabled hospitals to establish "hospital based" entities to maximize
their net income.

The new system aims to simplify Medicare reimbursement policies, while
improving hospital efficiency in rendering outpatient care and insure that
payments are sufficient to compensate hospitals for reasonable Medicare costs.
Under the APC system, hospitals will be paid fixed amounts for services, so the
hospital will need to develop and implement cost reduction strategies, without
sacrificing quality of care. Those facilities that are able to reduce operating
costs and manage the new billing requirements appropriately may actually benefit
in this new system. Ideally, patients will get a more focused treatment. There
should be an elimination of the performing of a large number of tests
(over-investigation) in patients whose medical problems are straightforward.
Greater stress may be placed on the wisdom and experience of the treating
physician. Eliminated would be "the just in case" testing and
possibly some routine tests whose results hardly contributes to the diagnosis.

OPPS also attempts to reduce co-insurance amounts for beneficiaries. Part B
of Medicare has an annual $100 liability to the beneficiary. After the
deductible is satisfied, the beneficiary is responsible for 20% of the fee
schedule. (Because hospital charges have consistently increased faster than
reasonable costs, Medicare beneficiaries have absorbed an increasing share of
total amount –Medicare payment and co-insurance- that hospitals were paid for
outpatient care reimbursed on a cost-related basis.) Since beneficiaries were
paying more, there was minimal incentive for hospitals to curb costs and avoid
unnecessary, or inappropriate utilization because the greater the spending, the
more Medicare pays.

Outpatient Prospective Payment System (OPPS) establishes fee schedule for
"covered" hospital outpatient services, which are sorted into
Ambulatory Patient Classification (APC) groups. Depending on the service
rendered during an encounter, a patient may be assigned to a single or multiple
groups. Medicare pays a set price or rate for each group, regardless of the
costs incurred in providing care. This payment arrangement encourages hospitals
to contain costs of the service within an APC group, but not the numbers of
groups provided. All else being equal, the lower the cost of a group and the
greater the number of groups, the healthier a hospitals bottom-line.

There are about 450 APC groups including surgical procedures, radiology and
other diagnostic procedures, clinic visits, emergency department visits,
medical supplies and surgical dressings and colorectal cancer screenings and
various preventative services. In the final regulations, the original 345
classifications were expanded to 450 and include three categories: surgical,
medical and ancillary. There are 255 APCs for procedures, 188 for diagnostic
activities and 8 for medical services. APC system does not cover physical,
speech and occupational therapies, mammography screenings, clinical diagnostic
lab services, durable medical equipment, orthotics and prosthetic when hospital
acts as a supplier of these items, services covered by the composite rate for
patients with end stage renal disease, professional services of physicians and
non-physician practitioners, and ambulance services. (Medicare continues to pay
for these under fee-for-service schedule or other prospectively determined
amounts.) It will not reward over-testing or under-testing patients in the
Emergency Department and some services may be excluded or denied if HCFA does
not feel the patients’ condition require emergency treatment.

Forty-four hospital procedures from the inpatient list were classified
ambulatory payment classification. These procedures include excision of chest
wall tumors, orthopedic repair procedures, vascular procedures and ureteral entoscopies. Previously, these procedures were billed under
a cost basis, but will be on a set fee basis under the APC program. Payments
tend to be reduced when procedures are reclassified from the inpatient list to
APC, although payments have increased for certain procedures.

In the future, the CMS will create APC groups for insertion of pacemakers,
replacement of pacemaker electrodes, implantation of a pacemaker and electrodes
and removal of a pacemaker.

Certain services have been bundled into APC groups such as anesthesia,
medical and surgical supplies, introcular lenses,
certain drugs, observation beds, operating and recovery rooms and incidental
services such as venipuncture.

The APC payment rate derived from historical hospital costs updated for
inflation and adjusted for case-mix and geographic wage variation. To become
APC compliant, hospitals will need to alter their current information systems
and invest in APC-related billing coding, and decision support systems. It is
HCFA way of pushing for an upgrade in provider documentation, with the goal of
bolstering accuracy and quality of medical records, thus facilitating accurate
billing and assessment of quality of care. CMSs Common Procedural Coding System
(HCPCS) will be used to classify visits into APCs. Level II codes, which are
used for pharmaceuticals and supplies, will be required. Hospitals will have a
Charge Description Master program that links financial and clinical data in a
common dataset. If these requirements are not met, an outpatient visit will not
group to an APC. Compliance with the new regulations will be essential. Providers
are subject to fines ranging from $5000 to $10000 for knowingly submitting
inappropriate claims.

The 450 APC groups consist of significant surgical and non-surgical
procedures, medical visits to clinics and emergency department and ancillary
services. Within, the APC services are similar or clinically homogeneous. The
median cost of the most expensive services in a group statutorily cannot exceed
twice the median cost of the least expensive service group.

OPPS substantially lightens the requirement that an entity must meet in
order to be designated "provider based" instead of freestanding and
thus be eligible to receive Medicare outpatient hospital payments. Hospitals
can use this to nurture a healthier bottom line by furnishing outpatient care
in an off-campus ambulatory clinic. The new eligibility standards are effective
1/10/01.